Putin Sets Stage for 2012 Comeback as Leader of Popular Front

Russian prime minister Vladimir Putin, left, and president Dmitry Medvedev speak during a wreath-laying ceremony near the Tomb of the Unknown Soldier in Moscow. Photographer: Dmitry Astakhov/AFP/Getty Images

May 9 (Bloomberg) -- Russian Prime Minister Vladimir Putin
may be moving to reassert his control over the presidency next
year by creating a broad coalition of supporters under his
personal leadership as backing for the ruling party wanes.

Putin, who handed the Kremlin to his protege, Dmitry
Medvedev, in 2008 because of a ban on serving three consecutive
terms, summoned leaders of business, labor and women’s groups to
his residence over the weekend for meetings with officials of
his United Russia party. The party needs fresh ideas and faces
before December parliamentary elections, he said.

Broadening popular support is key to ensuring United Russia
retains a majority in parliament and will bolster Putin’s
position, said Olga Khrystanovskaya, a sociologist who studies
Russia’s elites. The 58-year-old former KGB officer has remained
at the center of power as prime minister and hasn’t ruled out
running for president in March.

"Of course a good result will be a vote for Putin, as
leader of the party," Khrystanovskaya said. "Ahead of the
presidential race, in which Putin will probably run, he needs to
drum up popular support to occupy the presidency once again."

The prime minister’s call for an "All-Russia People’s
Front" comes as the popularity of United Russia, Putin and
Medvedev decline. The party was backed by 43 percent of voters
last month, down from 51 percent in December, according to the
Moscow-based Public Opinion Foundation. The party won a two-thirds majority in parliament in 2007.

Putin’s approval rating dropped to 53 percent from 55
percent in March, while Medvedev’s fell to 46 percent from 47
percent, according to the survey of 3,000 people conducted April
16-17. No margin of error was given.

Investor Concern

Uncertainty over the succession is weighing on investors,
who support Medvedev’s pledge to fight corruption and improve
the rule of law, said Kaha Kiknavelidze, a managing partner at
London-based Rioni Capital Partners LLP, who manages $75 million
in emerging-market assets.

"The investor base believes that a Medvedev second term
would be constructive for the markets," Kiknavelidze said.
"Obviously, implementation of his policies will remain key, but
they will be ready to give him the benefit of the doubt."

Medvedev, a 45-year-old former corporate lawyer, has
clashed with his mentor in recent months, saying it was
"unacceptable" for Putin to describe NATO-led attacks on Libya
as a "crusade." He later ordered that eight top government
officials, most seen as Putin allies, be removed from the boards
of state-owned companies.

Putin said last month that Russia must avoid liberal
"experiments" to ensure stable economic growth and become one of
the world’s top five economic powers.

Monthly Meetings

Among those present at the May 7 meeting at Putin’s
residence were the leaders of two prominent business lobbies:
Alexander Shokhin, head of the Russian Union of Industrialists
and Entrepreneurs, and Boris Titov, chairman of Delovaya Rossia.
Ekaterina Lakhova, head of the Women’s Union of Russia, and
Mikhail Shmakov, leader of Russia’s Federation of Independent
Unions, also attended.

The prime minister said he would meet with the popular
front’s coordinating committee as often as monthly and called
for the development of regional branches.

The front will "operate above the party, it’s not based on
the party," Dmitry Peskov, Putin’s press secretary, told
reporters in Volgograd, southern Russia, after the prime
minister announced the initiative May 6. "It would more likely
be based around Putin, who came up with the idea."

Signals of Returning

The so-called tandem of power with Medvedev may give way to
a single leadership structure after the 2012 election, according
to Nikolai Petrov, an analyst at the Carnegie Moscow Center.

"It’s important to combine the positions of formal and real
leader as the tandem would be highly inefficient in a second
term," Petrov said. "I don’t see any signs that Putin is leaving
but rather a lot of signals that he is returning."

Allowing Medvedev to serve another term would be an
unpopular move among Russia’s most powerful business and
political leaders because of his commitment to fighting
corruption, Khrystanovskaya said.

"A majority of the Russian elite favor Putin because he’s
done a lot to maintain their privileges," she said. "Anti-corruption is popular among the population. It’s not in the
interests of the political class."

Medvedev’s moves to assert himself in recent months have
included firing dozens of top Interior Ministry officials, most
recently the deputy chief of the Moscow police.

Political Legitimacy

One argument that may convince Putin not to return to the
presidency is that people could begin to view him as an aging
autocrat like Soviet-era leader Leonid Brezhnev, said Sergei
Markov, a United Russia lawmaker and political analyst.

The Center for Strategic Studies, a think-tank whose board
of trustees is headed by Deputy Prime Minister Dmitry Kozak,
warned in March that popular unrest could erupt in the next few
years because Russia’s leaders lack of democratic legitimacy.

That may mean Putin will name a third presidential
candidate fully under his control to prevent Medvedev from
expanding his power base and provide the illusion of a new face
in the Kremlin, according to Alexei Mukhin, head of the Moscow-based Center for Political Information.

Yet the safest bet remains Putin.

"He understands that it’s important to make changes at the
top, so he would prefer to have another person carry out his
policies," Markov said. "But Putin’s own team wants him to stay
around."